MFF – 090806 – 19:26 Hrs

When all things were seemingly good, came today’s sudden profit booking and many were taken by surprise. Two reasons which led to today’s profit booking were 1. Market requires around 6000 Crs to apply for the NHPC IPO which opens tomorrow, and 2. Monsoon deficit is now pegged at 25% and as per a report it will have an impact of around 1% on GDP! We today fell inspite the fact that all other global markets were trading firm hence may see a recovery very soon.

Any bad news on GDP can harm the sentiments, this was evident today. We expect the government to work well so that markets also keep moving well. Two interesting articles “UPA loses its sheen too early into office” & “New froth in stock market?” have been posted on VRIDHI site. We keep posting such interesting articles so that all kinds of opinions are available on one platform which can let the readers think better before coming to conclusions.

Taking forward today’s fall we may further fall maximum till 15300 – 15000 if the fall really continues. Going with the global trend we may recover tomorrow or from the levels mentioned and could soon see Sensex at 16600 – 17000 where the actual resistance would be faced. The long term bottom remains at 12000 – 12500 which would be tested in the future as and when a new crisis like sub prime arises, may be we see credit card crisis or a property crisis.

Investments into Mutual Funds are likely to slow down on account of SEBI banning entry loads on investments and hence no distributor would be keen on selling equity funds on account of lower earnings. Post Office has already decided to close down the sales until further notice. Some unscrupulous agents may sell only ULIPs now and hence readers are advised caution.

It would be healthy if we can test 15000 before moving up again. Tomorrow being a Friday and a weekend coming up can support the move down, but we have to be ready to identify the up move and jump in before we miss the bus.